Biggest cuts since second world war

drc

Oh dear. Doesn't look good for Blighty. Cameron is saying that we are going to have the biggest cuts since the second world war and that there are years of pain ahead. The cuts announced so far are very sketchy. So far we have heard of possible raises to CGT, income tax, NI, VAT and cuts to some benefits such as child trust funds and possibly cuts to tax credits to higher earners. I don't think this is going to make much of a dent on the defecit. Surely the really apocalyptic cuts/tax rises will not be announced until 22nd June. What do you think they are likely to be?

1984ReturnsForReal_2

CGT
NI (as planned bar business)
Family Tax Credits
Child Tax Credit
VAT
Tax Thresholds
Interest Rates (obviously not Camerons decision )

Blacklight

Spot the odd one out. I'd know where I'd look if I was planning to find 17%.

1984ReturnsForReal_2

Blacklight wrote: »

Spot the odd one out. I'd know where I'd look if I was planning to find 17%.

If that refers to pensions you have 2 issues.

1) Its not legal to take away a contractual obligation without agreement
2) You would have to deal with the whole of the public service grinding to a halt with strikes.


The only way of doing it would be to rewrite new contracts & the saving will only come about years down the line.

Blacklight

1984ReturnsForReal wrote: »

If that refers to pensions you have 2 issues.

1) Its not legal to take away a contractual obligation without agreement
2) You would have to deal with the whole of the public service grinding to a halt with strikes.


The only way of doing it would be to rewrite new contracts & the saving will only come about years down the line.

Fair points. Although the plug was pulled on private sector final salary pensions without too much hassle.

Depends on what's in your contract I suspect.

Either way it's wrong to spend more on pensions for public sector workers that education.

Also, I can't see many people having much sympathy with anyone going on strike right now.

Generali

1984ReturnsForReal wrote: »

1) Its not legal to take away a contractual obligation without agreement

The Government gets to write contract law so unfortunately it would be legal. Immoral but legal.

1984ReturnsForReal_2

Blacklight wrote: »

Also, I can't see many people having much sympathy with anyone going on strike right now.

Doesn't mean it won't happen.

& economically it is a long drawn out process & will not add benefit overnight.

Far, far more immediate fish to fry if you want to make a dent on the deficit within the next couple of years.

The first place I would be looking in that simplified pie chart would be within a full breakdown of the 38% whilst the lawyers are going down the pensions route.

1984ReturnsForReal_2

Generali wrote: »

The Government gets to write contract law so unfortunately it would be legal. Immoral but legal.

Another how many years before that gets drawn up & becomes law?

A._Badger

Don't forget, the Uk doesn't make its own law any longer. Such a move would inevitably be challenged under the ubiquitous European 'Human Rights' (sic) legislation and would, at the very least, drag on for years.

1984ReturnsForReal_2

A._Badger wrote: »

Don't forget, the Uk doesn't make its own law any longer. Such a move would inevitably be challenged under the ubiquitous European 'Human Rights' (sic) legislation and would, at the very least, drag on for years.

It would drag on for years & as it stands they would win.

michaels

Several European countries have actually cut benefits and public sector wages. The UK may be able to achieve similar with a nominal freeze plus currency depreciation/inflation. I beleive in Eire they added a 'pensions levy' to pulic sector earnings to address that issue.

Economically the least destructive would be to increase taxes on those who can afford to currently save some of their income so I see a lot more means testing of benefits (winter fuel payment, child benefit), more rapid withdrawal of tax credits, VAT increases (maybe softened with some broadening of the exempt/low rate 'essentials' categories to placate the fairness brigade) and I would advocate (but it won't happen) a scraping of the artificial tax/NI distinction allowing for top NI limit to be scrapped and tax rates to be adjusted, possibly with some of the lib dem lower threshold / cap gains tax changes incorporated.

Pull this off in total, and nominal reductions in public expenditure could be small, increases in tax revenue large (again fiscal drag with inflation helps here) and the pain has been shared but skewed towards those who can now save to avoid recessionary reductions in private consumption.

Funnily enough this agenda is much more progressive/redistributive than what labour would do (they are too worried about alienating middle class workers and public sector employees who are generally above the median on the income scale) and would likely increase the effective marginal rates on income - it is a funny old world.